Spic to invest Rs 300 cr in converting urea plant to gas

The AC-Muthiah led Southern Petrochemical Industries Corporation (Spic) is to invest around Rs 300 crore to convert its urea plant at Tuticorin, Tamil Nadu, to run on gas from naptha.

The debt-ridden company, in the process of coming out from a corporate debt restructuring (CDR) exercise, has planned to fund the project through internal accrual.

Ashwin C Muthiah, who took over as new chairman last week, said the company was undergoing massive restructuring and things were now looking good. However, the issue of gas fuel was a major challenge. The Union government had asked all naptha/fuel oil-based units producing urea to convert to gas by March 2013. Subsidy on urea would be computed on the basis of gas prices after the deadline.

Muthiah Jr said the conversion cost would be Rs 300 crore. “We don’t want to go for borrowing or equity," he said.

Spic had Rs 3,000 crore of debt and has paid back 90 per cent. Muthiah said it would come out of CDR in the next eight to 12 quarters.

The Tuticorin unit was closed in 2007 after the company defaulted on payment of loans. Spic is one of South India's prominent industrial houses, with interests in fertilisers, chemicals and petrochemicals.